American Print Works v. Lawrence, 23 N.J.L. 590

Facts:

The mayor of New York was sued for damages by the owner of a building which he had ordered blasted to stay the great fire of 1853. The plaintiff contended that the action is one of expropriation for which he was entitled to payment of just compensation.

Issue: WON the action of the mayor is considered as expropriation.

Held: The destruction of the property in question does not come under the right of eminent domain, but under the right of necessity, or self-preservation. The right of eminent domain is a public right; it arises from the laws of society and is vested in the state or its grantee, acting under the right and power of the state, or benefit of the state, those acting under it. The right of necessity arises under the laws of the society or society itself. It is the right of self-defense, of self-preservation, whether applied to persons or to property. It is a private right vested in the individual, and with which the right of the state or state necessity has nothing to do. In the case at bar, the petitioner cannot claim just compensation because the destruction is not a form of taking contemplated in the exercise of power of eminent domain. However, he can recover indemnification for damages from those who benefited.

REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. LA ORDEN DE PP. BENEDICTINOS DE FILIPINAS, defendant-appellee.

Office of the Solicitor General for plaintiff-appellant. Ledesma, Puno, Guytingco, Antonio and Associates for defendant-appellee.

DIZON, J.:

To ease and solve the daily traffic congestion on Legarda Street, the Government drew plans to extend Azcarraga street from its junction with Mendiola street, up to the Sta. Mesa Rotonda, Sampaloc, Manila. To carry out this plan it offered to buy a portion of approximately 6,000 square meters of a bigger parcel belonging to La Orden de PP. Benedictinos de Filipinas, a domestic religious corporation that owns the San Beda College, a private educational institution situated on Mendiola street. Not having been able to reach an agreement on the matter with the owner, the Government instituted the present expropriation proceedings.

On May 27, 1957 the trial court, upon application of the Government — hereinafter referred to as appellant — issued an order fixing the provisional value of the property in question at P270,000.00 and authorizing appellant to take immediate possession thereof upon depositing said amount. The deposit having been made with the City Treasurer of Manila, the trial court issued the corresponding order directing the Sheriff of Manila to place appellant in possession of the property aforesaid.

On June 8, 1957, as directed by the Rules of Court, the herein appellee, in lieu of an answer, filed a motion to dismiss the complaint based on the following grounds:

I. That the property sought to be expropriated is already dedicated to public use and therefore is not subject to expropriation.

II. That there is no necessity for the proposed expropriation.

III. That the proposed Azcarraga Extension could pass through a different site which would entail less expense to the Government and which would not necessitate the expropriation of a property dedicated to education.

IV. That the present action filed by the plaintiff against the defendant is discriminatory.

V. That the herein plaintiff does not count with sufficient funds to push through its project of constructing the proposed Azcarraga Extension and to allow the plaintiff to expropriate defendant's property at this time would be only to needlessly deprive the latter of the use of its property.".

The government filed a written opposition to the motion to dismiss (Record on Appeal, pp. 30-37) while appellee filed a reply thereto (Id., pp. 38-48). On July 29, 1957, without receiving evidence upon the questions of fact arising from the complaint, the motion to dismiss and the opposition thereto filed, the trial court issued the appealed order dismissing the case.

The appealed order shows that the trial court limited itself to deciding the point of whether or not the expropriation of the property in question is necessary (Rec. on Ap., p. 50) and, having arrived at the conclusion that such expropriation was not of extreme necessity, dismissed the proceedings.

It is to be observed that paragraph IV of the complaint expressly alleges that appellant needs, among other properties, the portion of appellee's property in question for the purpose of constructing the Azcarraga street extension, and that

paragraph VII of the same complaint expressly alleges that, in accordance with Section 64(b) of the Revised Administrative Code, the President of the Philippines had authorized the acquisition, thru condemnation proceedings, of the aforesaid parcel of land belonging to appellee, as evidenced by the third indorsement dated May 15, 1957 of the Executive Secretary, Office of the President of the Philippines, a copy of which was attached to the complaint as Annex "C" and made an integral part thereof. In denial of these allegations appellee's motion to dismiss alleged that "there is no necessity for the proposed expropriation". Thus, the question of fact decisive of the whole case arose.

It is the rule in this jurisdiction that private property may be expropriated for public use and upon payment of just compensation; that condemnation of private property is justified only if it is for the public good and there is a genuine necessity therefor of a public character. Consequently, the courts have the power to inquire into the legality of the exercise of the right of eminent domain and to determine whether or not there is a genuine necessity therefor (City of Manila vs. Chinese Community, 40 Phil. 349; Manila Railroad Company vs. Hacienda Benito, Inc., 37 O.G. 1957).

Upon the other hand, it does not need extended argument to show that whether or not the proposed opening of the Azcarraga extension is a necessity in order to relieve the daily congestion of traffic on Legarda St., is a question of fact dependent not only upon the facts of which the trial court very liberally took judicial notice but also up on other factors that do not appear of record and must, therefore, be established by means of evidence. We are, therefore, of the opinion that the parties should have been given an opportunity to present their respective evidence upon these factors and others that might be of direct or indirect help in determining the vital question of fact involved, namely, the need to open the extension of Azcarraga street to ease and solve the traffic congestion on Legarda street.

WHEREFORE, the appealed order of dismissal is set aside and the present case is remanded to the trial court for further proceedings in accordance with this decision. Without costs

CITY OF MANILA VS. CHINESE COMMUNITY [40 Phil 349; No. 14355; 31 Oct 1919]Saturday, January 31, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: The City of Manila, plaintiff herein, prayed for the expropriation of a portion

private cemetery for the conversion into an extension of Rizal Avenue. Plaintiff

claims that it is necessary that such public improvement be made in the said portion

of the private cemetery and that the said lands are within their jurisdiction.

Defendants herein answered that the said expropriation was not necessary because

other routes were available. They further claimed that the expropriation of the

cemetery would create irreparable loss and injury to them and to all those persons

owing and interested in the graves and monuments that would have to be

destroyed.

The lower court ruled that the said public improvement was not necessary on the

particular-strip of land in question. Plaintiff herein assailed that they have the right

to exercise the power of eminent domain and that the courts have no right to

inquire and determine the necessity of the expropriation. Thus, the same filed an

appeal.

Issue: Whether or not the courts may inquire into, and hear proof of the necessity

of the expropriation.

Held: The courts have the power of restricting the exercise of eminent domain to

the actual reasonable necessities of the case and for the purposes designated by

the law. The moment the municipal corporation or entity attempts to exercise the

authority conferred, it must comply with the conditions accompanying the

authority. The necessity for conferring the authority upon a municipal corporation

to exercise the right of eminent domain is admittedly within the power of the

legislature. But whether or not the municipal corporation or entity is exercising the

right in a particular case under the conditions imposed by the general authority, is a

question that the courts have the right to inquire to.

Republic vs. PLDT

(1969)

FACTS:

Sometime in 1933, the defendant PLDT entered into an agreement with RCA Communications Inc., an American corporation, whereby telephone messages coming from the US and received by RCA’s domestic station, could automatically be transferred to the lines of PLDT, and vice versa.

The plaintiff through the Bureau of Telecommunications, after having set up its own Government Telephone System, by utilizing its own appropriation and equipment and by renting trunk lines of the PLDT, entered into an agreement with RCA for a joint overseas telephone service.

Alleging that plaintiff is in competition with them, PLDT notified the former and receiving no reply, disconnected the trunk lines being rented by the same; thus, prompting the plaintiff to file a case before the CFI praying for judgment commanding PLDT to execute a contract with the Bureau for the use of the facilities of PLDT’s telephone system, and for a writ of preliminary injunction against the defendant to restrain the severance of the existing trunk lines and restore those severed.

ISSUE:

Whether or not the defendant PLDT can be compelled to enter into a contract with the plaintiff.

HELD:

“ x x x while the Republic may not compel the PLDT to celebrate a contract with it, the Republic may, in the exercise of the sovereign power of eminent domain, require the telephone company to permit interconnection of the government telephone system and that of the PLDT, as the needs of the government service may require, subject to the payment of just compensation to be determined by the court.”

Republic v PLDTFacts: PLDT and RCA Communications Inc (which is not a party to this case but has contractual relations with e parties) entered into an agreement where telephone messages, coming from the US and received by RCA's domestic station could automatically be transferred to the lines of PLDT and vice versa.

The Bureau of Telecommunications set up its own Government Telephone System (GTS) by renting the trunk lines of PLDT to enable government offices to call private parties. One of the many rules prohibits the use of the service for his private use.

Republic of the Philippines entered into an agreement with RCA for a joint overseas telephone service where the Bureau would convey radio-telephone overseas calls received by the RCA's station to and from local residents.

PLDT complained that the Bureau was violating the conditions for using the trunk lines not only for the use of government offices but even to serve private persons or the general public. PLDT gave a notice that if violations were not stopped, PLDT would sever the connections -which PLDT did.

Republic sued PLDT commanding PLDT to execute a contract, through the Bureau, for the use of the facilities of defendant's telephone system throughout the Philippines under such terms and conditions as the court finds it reasonable.

Issue:Whether or not Republic can command PLDT to execute the contract.

Held: No. The Bureau was created in pursuance of a state policy reorganizing the government offices to meet the exigencies attendant upon the establishment of a free Gov't of the Phil.

When the Bureau subscribed to the trunk lines, defendant knew or should have known that their use by the subscriber was more or less public and all embracing in nature.

The acceptance by the defendant of the payment of rentals, despite its knowledge that the plaintiff had extended the use of the trunk lines to commercial purposes, implies assent by the defendant to such extended use. Since this relationship has been maintained for a long time and the public has patronized both telephone systems, and their interconnection is to the public convenience, it is too late for the defendant to claim misuse of its facilities, and it is not now at liberty to unilaterally sever the physical connection of the trunk lines.

To uphold PLDT's contention is to subordinate the needs of the general public.

PLDT vs NTC

G.R. No. 88404

October 18, 1990

FACTS:

a. Petitioner assails two (2) orders of public respondent National Telecommunications Commission granting private respondent Express Telecommunications (ETCI) provisional authority to install, operate and maintain a Cellular Mobile Telephone System in Metro Manila now ETCI in accordance with specific conditions on the following grounds;

1. ETCI is not capacitated or qualified under its legislative franchise to operate a system-wide telephone or network of telephone service such as the one proposed in its application;

2. ETCI lacks the facilities needed and indispensable to the successful operation of the proposed cellular mobile telephone system;

3. PLDT has its pending application with NTC Case No 86-86, to install and operate a Cellular Mobile Telephone System for domestic and international service not only in Manila but also in the provinces and that under the “prior operator” or “protection of investment” doctrine, PLDT has the priority preference in the operation of such service; and

4. the provisional authority, if granted, will result in needless, uneconomical, and harmful duplication, among others.

b. After evaluating the consideration sought by the PLDT, the NTC, maintained its ruling that liberally construed, applicant’s franchise carries with it the privilege to operate and maintain a cellular mobile telephone service. Subsequently, PLDT alleged essentially that the interconnection ordered was in violation of due process and that the grant of provisional authority was jurisdictionally and procedurally infirm. However, NTC denied the reconsideration.

ISSUES: Whether or not the contention of PLDT is tenable.

RULING:

a. Petition is dismissed for lack of merit.

b. There can be no question that the NTC is the regulatory agency of the national government with jurisdiction over all telecommunications entities. It is legally clothed with authority and given ample discretion to grant a provisional permit or authority. In fact, NTC may, on its own initiative, grant such relief even in the absence of a motion from an applicant.

c. Rep. Act No. 2090 grants ETCI (formerly FACI) "the right and privilege of constructing, installing, establishing and operating in the entire Philippines radio stations for reception and transmission of messages on radio stations in the foreign and domestic public fixed point-to-point and public base, aeronautical and land mobile stations, ... with the corresponding relay stations for the reception and transmission of wireless messages on radiotelegraphy and/or radiotelephony

d. A franchise is a property right and cannot be revoked or forfeited without due process of law. The determination of the right to the exercise of a franchise, or whether the right to enjoy such privilege has been forfeited by non-user, is more properly the subject of the prerogative writ of quo warranto, the right to assert which, as a rule, belongs to the State "upon complaint or otherwise" (Sections 1, 2 and 3, Rule 66, Rules of Court), 2 the reason being that the abuse of a franchise is a public wrong and not a private injury. A forfeiture of a franchise will have to be declared in a direct proceeding for the purpose brought by the State because a franchise is granted by law and its unlawful exercise is primarily a concern of Government.

e. Transfers of shares of a public utility corporation need only NTC approval, not Congressional authorization. What transpired in ETCI were a series of transfers of shares starting in 1964 until 1987. The approval of the NTC may be deemed to have been met when it authorized the issuance of the provisional authority to ETCI.

f. PLDT cannot justifiably refuse to interconnect. Rep. Act No. 6849, or the Municipal Telephone Act of 1989, approved on 8 February 1990, mandates interconnection providing as it does that "all domestic telecommunications carriers or utilities ... shall be interconnected to the public switch telephone network." Such regulation of the use and ownership of telecommunications systems is in the exercise of the plenary police power of the State for the promotion of the general welfare. The 1987 Constitution recognizes the existence of that power when it provides.

Republic of the Philippines vs. Carmen M. Vda. De Castellvi, et al.

G.R. No. L-20620 August 15, 1974

Case Digest

FACTS: In 1947, the republic, through the Armed Forces of the Philippines (AFP), entered into a lease agreement over a land in Pampanga with Castellvi on a year-to-year basis. When Castellvi gave notice to terminate the lease in 1956, the AFP refused because of the permanent installations and other facilities worth almost P500,000.00 that were erected and already established on the property. She then instituted an ejectment proceeding against the AFP. In 1959, however, the republic commenced the expropriation proceedings for the land in question.

ISSUE: Whether or not the compensation should be determined as of 1947 or 1959.

RULING: The Supreme Court ruled that the “taking” should not be reckoned as of 1947, and that just compensation should not be determined on the basis of the value of the property as of that year.

The requisites for taking are:

1. The expropriator must enter a private property;2. The entry must be for more than a momentary period;3. It must be under warrant or color of authorities;4. The property must be devoted for public use or otherwise informally

appropriated or injuriously affected; and5. The utilization of the property for public use must be such a way as to oust

the owner and deprive him of beneficial enjoyment of the property.

Only requisites 1, 3, and 4 were present. It is clear, therefore, that the "taking" of Catellvi's property for purposes of eminent domain cannot be considered to have taken place in 1947 when the Republic commenced to occupy the property as lessee thereof.

Under Sec. 4, Rule 67 of the Rules of Court, “just compensation” is to be determined as of the date of the filing of the complaint. The Supreme Court has ruled that when the taking of the property sought to be expropriated coincides with the commencement of the expropriation proceedings, or takes place subsequent to the filing of the complaint for eminent domain, the just compensation should be determined as of the date of the filing of the complaint.

In the instant case, it is undisputed that the Republic was placed in possession of the Castellvi property, by authority of court, on August 10, 1959. The “taking” of the Castellvi property for the purposes of determining the just compensation to be paid must, therefore, be reckoned as of June 26, 1959 when the complaint for eminent domain was filed.

United States v. Causby, 328 U.S. 256 (1946)

Facts

Causby (plaintiff) owned a dwelling and a chicken farm near a municipal airport in Greensboro, NC. In 1942, the United States (defendant) began using this airport for frequent and regular military flights, which passed directly over Causby’s property at 83 feet, which was 67 feet above the house, 63 feet above the barn and 18 feet above the highest tree. They frequently came so close to respondents' property that they barely missed the tops of trees, the noise was startling, and the glare from their landing lights lighted the place up brightly at night. This led to the death of 150 chickens which destroyed the use of the property as a chicken farm and caused loss of sleep, nervousness, and fright on the part of respondents. They sued in the Court of Claims to recover for an alleged taking of their property and for damages to their poultry business. The court of claims held that the United States had taken an easement over the property, and granted an award of $2,000 for the easement and resulting property damage. However it made no finding as to the precise nature or duration of the easement.

Issue:

Whether or not Causby was owed compensation under the Takings Clause (U.S. Constitutional Amendment V)

Ruling:

Yes. The majority opinion cited the law (49 U.S.C. § 180 ) where Congress defined the "navigable airspace" in the public domain, as that above the "minimum safe altitude" which varies from 500 to 1000 feet depending on time of day, aircraft, and type of terrain. Since the aircraft passing over Causby's property were at 83 feet, the court determined the flight path was an easement, a form of property right. Because the government had taken the easement through private property, Causby was owed compensation under the Takings Clause (U.S. Constitutional Amendment V)

Amendment V:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

Flights of aircraft over private land which are so low and frequent as to be a direct and immediate interference with the enjoyment and use of the land are as much an appropriation of the use of the land as a more conventional entry upon it. Pp. 328 U. S. 261-262, 328 U. S. 264-267.

Physical invasion of the property was not necessary where there was an intrusion so immediate and direct as to subtract from respondents' full enjoyment and use of the property.

Further, the damages were not merely consequential; they were the product of a direct invasion of respondents' domain.

The United States Supreme Court reversed and remanded the action; however, on the basis that the record was not clear whether the easement taken was temporary or permanent. The court remanded the case for a determination of the necessary findings regarding the nature of the easement.

NPC vs Aguirre Paderanga

FACTS:

National Power Corporation (NPC) filed a case for expropriation against Petrona O. Dilao, et al. before Regional Trial Court of Cebu, involving parcels of land located in Cebu. Expropriation was instituted to implement Leyte-Cebu Interconnection Project.

A day after the complaint was filed, NPC filed an urgent ex parte motion for the issuance of writ of possession of the lands.

The RTC issued an order granting NPC‘s motion. It appointed 3 Board of Commissioners to determine just compensation. The board recommended appraisal of parcel of land co-owned by Dilao, et al. at P516.66 per square meter. However, NPC filed an opposition assailing the correctness of the appraisal for failing to take into account Republic Act No. 6395 which provides that the just compensation for right-of-way easement shall be equivalent to ten percent (10%) of the market value of the property. NPC asserted that Digao, et al. could still use the traversed land for agricultural purposes, subject only to its easement. It added that the lots were of no use to its operations except for its transmission lines.

The RTC rendered its decision ordering NPC to pay fair market value at P516.66 per square meter. NPC appealed but the same was denied due to failure to file and perfect its appeal within the prescribed period. A motion for execution of judgment was subsequently filed by Dilao, et al. which was granted by the lower court. On appeal, the CA affirmed the lower court‘s decision. Hence, this petition.

ISSUE:

Whether or not RTC abused its authority by misapplying the rules governing fair valuation

HELD:

In finding that the trial court did not abuse its authority in evaluating the evidence and the reports placed before it nor did it misapply the rules governing fair valuation, the Court of Appeals found the majority report‘s valuation of P500 per square meter to be fair. Said factual finding of the Court of Appeals, absent any showing that the valuation is exorbitant or otherwise unjustified, is binding on the parties as well as this Court.

Indeed, expropriation is not limited to the acquisition of real property with a corresponding transfer of title or possession. The right-of-way easement resulting in a restriction or limitation on property rights over the land traversed by transmission lines, as in the present case, also falls within the ambit of the term ―expropriation.

From the Commissioner‘s report it cannot be gainsaid that NPC‘s complaint merely involves a simple case of mere passage of transmission lines over Dilao et al.‘s property. Aside from the actual damage done to the property traversed by the transmission lines, the agricultural and economic activity normally undertaken on the entire property is unquestionably restricted and perpetually hampered as the environment is made dangerous to the occupant‘s life and limb.

The determination of just compensation in expropriation proceedings being a judicial function, the Court finds the commissioners‘ recommendation of P516.66 per square meter, which was approved by the trial court, to be just and reasonable compensation for the expropriated property of Dilao and her siblings.

City of Quezon v. Ericta, 122 SCRA 759

FACTS:

Quezon City enacted an ordinance entitled “ORDINANCE REGULATING THE

ESTABLISHMENT, MAINTENANCE AND OPERATION OF PRIVATE MEMORIAL TYPE

CEMETERY OR BURIAL GROUND WITHIN THE JURISDICTION OF QUEZON CITY AND

PROVIDING PENALTIES FOR THE VIOLATION THEREOF”. The law basically provides

that at least six (6) percent of the total area of the memorial park cemetery shall be

set aside for charity burial of deceased persons who are paupers and have been

residents of Quezon City for at least 5 years prior to their death, to be determined

by competent City Authorities. QC justified the law by invoking police power.

Petitioners argue that the taking of the respondent’s property is a valid and

reasonable exercise of police power and that the land is taken for a public use as it

is intended for the burial ground of paupers. They further argue that the Quezon

City Council is authorized under its charter, in the exercise of local police power, ”

to make such further ordinances and resolutions not repugnant to law as may be

necessary to carry into effect and discharge the powers and duties conferred by this

Act and such as it shall deem necessary and proper to provide for the health and

safety, promote the prosperity, improve the morals, peace, good order, comfort

and convenience of the city and the inhabitants thereof, and for the protection of

property therein.”

ISSUE: Whether or not the ordinance is valid.

HELD: The SC held the law as an invalid exercise of police power.It seems to the

court that Section 9 of Ordinance No. 6118, Series of 1964 of Quezon City is not a

mere police regulation but an outright confiscation. It deprives a person of his

private property without due process of law, nay, even without

compensation.There is no reasonable relation between the setting aside of at least

six (6) percent of the total area of all private cemeteries for charity burial grounds

of deceased paupers and the promotion of health, morals, good order, safety, or

the general welfare of the people. The ordinance is actually a taking without

compensation of a certain area from a private cemetery to benefit paupers who are

charges of the municipal corporation. Instead of building or maintaining a public

cemetery for this purpose, the city passes the burden to private cemeteries.

TOPIC: Public Use

C26 – Province of Camarines Sur v. CA, 222 SCRA 173

Facts: Sangguniang Panlalawigan (SP) of the Province of Camarines Sur passed a Resolution No. 129 authorizing the Provincial Governor to purchase or expropriate property in order to establish a pilot farm for non-food and non-traditional agricultural crops and a housing project for provincial government employees. By virtue of this resolution, the Province of Camarines Sur, through its Governor, filed two separate cases for expropriation against private respondents (the San Joaquins), at the Regional Trial Court, Pili, Camarines Sur.

The San Joaquins moved to dismiss the complaints on the ground of inadequacy of the price offered for their property. In an order, the trial court denied the motion to dismiss and authorized the Province of Camarines Sur to take possession of the property upon the deposit with the Clerk of Court the amount provisionally fixed by the trial court to answer for damages that private respondents may suffer in the event that the expropriation cases do not prosper.

The San Joaquins filed a motion for relief from the order, authorizing the Province of Camarines Sur to take possession of their property and a motion to admit an amended motion to dismiss. Both motions were denied in the order dated February 26, 1990.

In their petition before the Court of Appeals, the San Joaquins asked: (a) that Resolution of the Sangguniang Panlalawigan be declared null and void; (b) that the complaints for expropriation be dismissed; and (c) that the order denying the motion to dismiss and allowing the Province of Camarines Sur to take possession of the property subject of the expropriation and the order dated February 26, 1990, denying the motion to admit the amended motion to dismiss, be set aside. They also asked that an order be issued to restrain the trial court from enforcing the writ of possession, and thereafter to issue a writ of injunction.

Asked by the Court of Appeals to give his Comment to the petition, the Solicitor General stated that under Section 9 of the Local Government Code (B.P. Blg. 337),

there was no need for the approval by the Office of the President of the exercise by the Sangguniang Panlalawigan of the right of eminent domain. However, the Solicitor General expressed the view that the Province of Camarines Sur must first secure the approval of the Department of Agrarian Reform of the plan to expropriate the lands of petitioners for use as a housing project.

The Court of Appeals set aside the order of the trial court, allowing the Province of Camarines Sur to take possession of private respondents' lands and the order denying the admission of the amended motion to dismiss. It also ordered the trial court to suspend the expropriation proceedings until after the Province of Camarines Sur shall have submitted the requisite approval of the Department of Agrarian Reform to convert the classification of the property of the private respondents from agricultural to non-agricultural land.

Issue: 1) Whether or not the resolution is null and void. Corollary to this issue is

whether or not the expropriation is for a public use.

2) Whether or not the exercise of the power of eminent domain in this case is restricted by the Comprehensive Agrarian Reform Law (R.A. No. 6657).

3) Whether or not the complaint for expropriation may be dismissed on the ground of inadequacy of the compensation offered.

Ruling:1) The expropriation is for a public purpose; hence the resolution is

authorized and valid.

SC explained that there had been a shift from the old to the new concept of “public purpose: Old concept is that the property must actually be used by the general public. The new concept, on the other hand, means public advantage, convenience or benefit, which tends to contribute to the general welfare and the prosperity of the whole community.

In this case, the proposed pilot development center would inure to the direct benefit and advantage of the people of the Province of Camarines

Sur. Once operational, the center would make available to the community invaluable information and technology on agriculture, fishery and the cottage industry. Ultimately, the livelihood of the farmers, fishermen and craftsmen would be enhanced. The housing project also satisfies the public purpose requirement of the Constitution.

2) No, (citing Ardana vs Reyes, SC here said that the implication of the Ardana case is that) the power of expropriation is superior to the power to distribute lands under the land reform program.

Old Local Government Code does not intimate in the least that Local Government Units (LGUs) must first secure approval of the Department of Land Reform for conversion of agriculture to non-agriculture use. Likewise, no provision in the Comprehensive Agrarian Reform (R.A. No. 6657) subjecting expropriation by LGUs to the control of Department of Agrarian Reform.

Moreover, Sec 65 of R.A. No. 6657 is not in point because it is applicable only to lands previously placed under the agrarian reform program. This is limited only to applications for reclassification submitted by land owners or tenant beneficiaries.

Statutes conferring power of eminent domain to political subdivisions cannot be broadened or constricted by implication.

3) Fears of private respondents that they will be paid on the basis of the valuation declared in the tax declarations of their property, are unfounded.

It is unconstitutional to fix just compensation in expropriation cases based on the value given either by the owners or the assessor. Rules for determining just compensation are those laid down in Rule 67 ROC, evidence must be submitted to justify what they consider is the just compensation.

WHEREFORE, the petition is GRANTED and the questioned decision of the Court of Appeals is set aside insofar as it (a) nullifies the trial court's order allowing the Province of Camarines Sur to take possession of private respondents' property; (b)

orders the trial court to suspend the expropriation proceedings; and (c) requires the Province of Camarines Sur to obtain the approval of the Department of Agrarian Reform to convert or reclassify private respondents' property from agricultural to non-agricultural use.

The decision of the Court of Appeals is AFFIRMED insofar as it sets aside the order of the trial court, denying the amended motion to dismiss of the private respondents.

ESLABAN V DE ONORIO

G.R. No. 146062

June 28, 2001

CASE DIGEST:

Facts: Clarita Vda. De Onorio is the owner of the land in Barangay M. Roxas, Sto. Nino, South Cotabato. Such land is the subject for the construction of an irrigation canal of the National Irrigation Administration (NIA). Mr. Santiago Eslaban Jr. is the project manager of NIA. The parties agreed to the construction of the canal provided that the government will pay for the area that has been taken. A right-of-way agreement was entered into by the parties in which respondent was paid the amount of P4, 180.00 as right of way damages. Subsequently, respondent executed an Affidavit of Waiver of Rights and Fees which waives her rights for the damage to the crops due to construction of the right of way. After which, respondent demands that petitioner pay P111, 299.55 for taking her property but the petitioner refused. Petitioner states that the government had not consented to be sued and that the respondent is not entitled for compensation by virtue of the homestead patent under CA no. 141. The RTC held that the NIA should pay respondent the amount of P107, 517.60 as just compensation for the 24,660 sq meters that have been used for the construction of the canal. The Court of Appeals also affirmed the decision of the RTC.

Issue: Whether or Not the CA erred in affirming the decision of the RTC.

Held: The CA is correct in affirming the decision of the RTC but modifications shall be made regarding the value of the just compensation. The following are the points to be considered in arriving in this decision.

First, Rule 7 par 5 of the Rule of Civil Procedure provides that the certification against forum shopping should only be executed by the plaintiff or the principal. The petition for review was filed by Mr. Eslaban jr. while the verification or certification were signed by Mr. Cesar Gonzales, an administrator of the agency. Neither of the two has the authority to sign such certificate for they are not the plaintiff or principal. Such case is a sufficient ground for dismissing this petition.

Second, PD NO. 1529 provides that the owner is required to recognize in favor of the government the easement of a “public highway, way, private way established by law, or any government canal where the certificate of title does not state that the boundaries thereof have been pre-determined. In the case at bar, the irrigation canal was constructed on Oct 1981 after the property had been registered in May of 1976. In this case, prior expropriation proceedings must be filed and just compensation shall be paid to the owner before the land could be taken for public use.

Third, In this case, just compensation is defined as not only the correct amount to be paid but the reasonable time for the Government to pay the owner. The CA erred in this point by stating that the market value (just compensation) of the land is determined in the filing of the complaint in 1991.The determination of such value should be from the time of its taking by the NIA in 1981.

Lastly, the petitioner cannot argue that the Affidavit of waiver of rights and fees executed by the respondent pertains to the payment of the value of the land therefore exempting NIA to pay the value of the land taken. Such waiver pertains only to the crops and improvements that were damage due to the construction of the right-of-way not the value of the land.

Wherefore, decision of CA affirmed with modification regarding the just compensation in the amount of P16, 047.61 per hectare.

PHILIPPINE PRESS INSTITUTE, INC., for and in behalf of 139 members, represented by its President, Amado P. Macasaet and its Executive Director Ermin F. Garcia, Jr., petitioner vs. COMMISSION ON ELECTIONS, respondent G.R. No. L-119694 May 22, 1995

Facts:

Respondent Comelec promulgated Resolution No. 2772 directing newspapers to provide free Comelec space of not less than one-half page for the common use of political parties and candidates. The Comelec space shall be allocated by the Commission, free of charge, among all candidates to enable them to make known their qualifications, their stand on public Issue and their platforms of government. The Comelec space shall also be used by the Commission for dissemination of vital election information. Petitioner Philippine Press Institute, Inc. (PPI), a non-profit organization of newspaper and magazine publishers, asks the Supreme Court to declare Comelec Resolution No. 2772 unconstitutional and void on the ground that it violates the prohibition imposed by the Constitution upon the government against the taking of private property for public use without just compensation. On behalf of the respondent Comelec, the Solicitor General claimed that the Resolution is a permissible exercise of the power of supervision (police power) of the Comelec over the information operations of print media enterprises during the election period to safeguard and ensure a fair, impartial and credible election.

Issue:

Whether or not Comelec Resolution No. 2772 is unconstitutional.

Held:

The Supreme Court declared the Resolution as unconstitutional. It held that to compel print media companies to donate “Comelec space” amounts to “taking” of private personal property without payment of the just compensation required in expropriation cases. Moreover, the element of necessity for the taking has not been established by respondent Comelec, considering that the newspapers were not unwilling to sell advertising space. The taking of private property for public use is authorized by the constitution, but not without payment of just compensation. Also Resolution No. 2772 does not constitute a valid exercise of the police power of the

state. In the case at bench, there is no showing of existence of a national emergency to take private property of newspaper or magazine publishers.

EPZA VS. DULAY [148 SCRA 305; G.R. No. L-59603; 29 Apr 1987]

Facts: The four parcels of land which are the subject of this case is where the

Mactan Export Processing Zone Authority in Cebu (EPZA) is to be constructed.

Private respondent San Antonio Development Corporation (San Antonio, for

brevity), in which these lands are registered under, claimed that the lands were

expropriated to the government without them reaching the agreement as to the

compensation. Respondent Judge Dulay then issued an order for the appointment

of the commissioners to determine the just compensation. It was later found out

that the payment of the government to San Antonio would be P15 per square

meter, which was objected to by the latter contending that under PD 1533, the

basis of just compensation shall be fair and according to the fair market value

declared by the owner of the property sought to be expropriated, or by the

assessor, whichever is lower. Such objection and the subsequent Motion for

Reconsideration were denied and hearing was set for the reception of the

commissioner’s report. EPZA then filed this petition for certiorari and mandamus

enjoining the respondent from further hearing the case.

Issue: Whether or Not the exclusive and mandatory mode of determining just

compensation in PD 1533 is unconstitutional.

Held: The Supreme Court ruled that the mode of determination of just

compensation in PD 1533 is unconstitutional.

The method of ascertaining just compensation constitutes impermissible

encroachment to judicial prerogatives. It tends to render the courts inutile in a

matter in which under the Constitution is reserved to it for financial determination.

The valuation in the decree may only serve as guiding principle or one of the factors

in determining just compensation, but it may not substitute the court’s own

judgment as to what amount should be awarded and how to arrive at such amount.

The determination of just compensation is a judicial function. The executive

department or the legislature may make the initial determination but when a party

claims a violation of the guarantee in the Bill of Rights that the private party may

not be taken for public use without just compensation, no statute, decree, or

executive order can mandate that its own determination shall prevail over the

court’s findings. Much less can the courts be precluded from looking into the

justness of the decreed compensation.

NHA VS REYES

Facts: National Housing Authority filed several expropriation complaints on the

sugarland owned by the petitioners Reyes. The land is located in Dasmarinas,

Cavite. The purpose of the expropriation is for the expansion of the Dasmarinas

Resettlement Project to accommodate the squatters who were relocated from

Manila. The trial court rendered judgment ordering the expropriation of these lots

with payment of just compensation. It was affirmed by the Supreme Court.

The petitioners Reyes alleged the failure of the respondents to comply with the

Supreme Court order, so they filed a complaint for forfeiture of their rights before

the RTC of Quezon City. They also said that NHA did not relocate squatters from

Manila on the expropriated lands which violate the reason for public purpose. The

petitioners prayed that NHA be enjoined from disposing and alienating the

expropriated properties and that judgment be rendered forfeiting all its rights and

interests under the expropriation judgment.

In the answer of NHA, they already paid a substantial amount to the petitioners.

Thus, several issues are already raised in the expropriation court.

The trial court dismissed the case. It held that NHA did not abandon the public

purpose because the relocation of squatters involves a long and tedious process. It

also entered into a contract with a developer for the construction of a low-cost

housing to be sold to qualified low income beneficiaries. The payment of just

compensation is independent of the obligation of the petitioners to pay capital

gains tax. Lastly, the payment of just compensation is based on the value at the

time the property was taken.

The Court of Appeals affirmed the decision.

Issue: Whether or not the property expropriated is taking for public purpose.

Held: The decision appealed is modified.

The 1987 Constitution explicitly provides for the exercise of the power of eminent

domain over the private properties upon payment of just compensation. Sec. 9,

Article III states that private property shall not be taken for public use without just

compensation. The constitutional restraints are public use and just compensation.

The expropriation judgment declared that NHA has a lawful right to take petitioners

properties “for the public use or purpose of expanding the Dasmarinas

Resettlement Project”.

The “public use” is synonymous with “public interest”, “public benefit”, “public

welfare”, and “public convenience”. The act of NHA in entering a contract with a

real estate developer for the construction of low cost housing cannot be taken to

mean as a deviation from the stated public purpose of their taking.

Expropriation of private lands for slum clearance and urban development is for a

public purpose even if the developed area is later sold to private homeowners,

commercial firms, entertainment and service companies and other private

concerns.

The expropriation of private property for the purpose of socialized housing for the

marginalized sector is in furtherance of the social justice provision under Section 1,

Article XIII of the Constitution.

When land has been acquired for public use in fee simple unconditionally, either by

the exercise of eminent domain or by purchase, the former owner retains no rights

in the land, and the public use may be abandoned, or the land may be devoted to a

different use, without any impairment of the estate or title acquired, or any

reversion to the former owner.

Hacienda Luisita Inc. (HLI) v. Presidential Agrarian Reform Council (PARC), et al., G.R. No. 171101, July 5, 2011 D E C I S I O N

VELASCO, JR., J.:I. THE FACTS

In 1958, the Spanish owners of Compañia General de Tabacos de Filipinas (Tabacalera) sold Hacienda Luisita and the Central Azucarera de Tarlac, the sugar mill of the hacienda, to the Tarlac Development Corporation (Tadeco), then owned and controlled by the Jose Cojuangco Sr. Group. The Central Bank of the Philippines assisted Tadeco in obtaining a dollar loan from a US bank. Also, the GSIS extended a PhP5.911 million loan in favor of Tadeco to pay the peso price component of the sale, with the condition that “the lots comprising the Hacienda Luisita be subdivided by the applicant-corporation and sold at cost to the tenants, should there be any, and whenever conditions should exist warranting such action under the provisions of the Land Tenure Act.” Tadeco however did not comply with this condition.

On May 7, 1980, the martial law administration filed a suit before the Manila RTC against Tadeco, et al., for them to surrender Hacienda Luisita to the then Ministry of Agrarian Reform (MAR) so that the land can be distributed to farmers at cost. Responding, Tadeco alleged that Hacienda Luisita does not have tenants, besides which sugar lands – of which the hacienda consisted – are not covered by existing agrarian reform legislations(PD 27-rice and corn). The Manila RTC rendered judgment ordering Tadeco to surrender Hacienda Luisita to the MAR. Therefrom, Tadeco appealed to the CA.

On March 17, 1988, during the administration of President Corazon Cojuangco Aquino, the Office of the Solicitor General moved to withdraw the government’s case against Tadeco, et al. The CA dismissed the case, subject to the PARC’s approval of Tadeco’s proposed stock distribution plan (SDP) in favor of its farmworkers. [Under EO 229 (Sec10) and later RA 6657(Sec31), Tadeco had the option of availing stock distribution as an alternative modality to actual land transfer to the farmworkers.] On August 23, 1988, Tadeco organized a spin-off corporation, herein petitioner HLI, as vehicle to facilitate stock acquisition by the farmworkers. For this purpose, Tadeco conveyed to HLI the agricultural land portion (4,915.75 hectares) and other farm-related properties of Hacienda Luisita in exchange for HLI shares of stock.

On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs) complement of Hacienda Luisita signified in a referendum their acceptance of the proposed HLI’s Stock Distribution Option Plan (SODP). On May 11, 1989, the SDOA was formally entered into by Tadeco, HLI, and the 5,848 qualified FWBs. This attested to by then DAR Secretary Philip Juico. The SDOA embodied the basis and mechanics of HLI’s SDP, which was eventually approved by the PARC after a follow-

up referendum conducted by the DAR on October 14, 1989, in which 5,117 FWBs, out of 5,315 who participated, opted to receive shares in HLI.As may be gleaned from the SDOA, included as part of the distribution plan are: (a) production-sharing equivalent to three percent (3%) of gross sales from the production of the agricultural land payable to the FWBs in cash dividends or incentive bonus; and (b) distribution of free homelots of not more than 240 square meters each to family-beneficiaries. The production-sharing, as the SDP indicated, is payable "irrespective of whether [HLI] makes money or not," implying that the benefits do not partake the nature of dividends, as the term is ordinarily understood under corporation law. (5,117 out of 5315 = shares; 132 = land distribution)

Prior to approval, DAR Secretary Miriam Defensor-Santiago proposed that the SDP be revised, along the following lines:

1. That over the implementation period of the [SDP], [Tadeco]/HLI shall ensure that there will be no dilution in the shares of stocks of individual [FWBs];2. That a safeguard shall be provided by [Tadeco]/HLI against the dilution of the percentage shareholdings of the [FWBs], i.e., that the 33% shareholdings of the [FWBs] will be maintained at any given time

November 21, 1989 - the PARC, under then Sec. Defensor-Santiago, issued Resolution No. 89-12-2, approving the SDP of Tadeco/HLI.

From 1989 to 2005, HLI claimed to have extended the following benefits to the FWBs:

(a) 3 billion pesos (P3,000,000,000) worth of salaries, wages and fringe benefits(b) 59 million shares of stock distributed for free to the FWBs;(c) 150 million pesos (P150,000,000) representing 3% of the gross produce;(d) 37.5 million pesos (P37,500,000) representing 3% from the sale of 500 hectares of converted agricultural land of Hacienda Luisita;(e) 240-square meter homelots distributed for free;(f) 2.4 million pesos (P2,400,000) representing 3% from the sale of 80 hectares at 80 million pesos (P80,000,000) for the SCTEX;(g) Social service benefits, such as but not limited to free hospitalization/medical/maternity services, old age/death benefits and no interest bearing salary/educational loans and rice sugar accounts.

Two separate groups subsequently contested this claim of HLI. (the petitions/protets)

CONVERSION PROPEROn August 15, 1995, HLI applied for the conversion of 500 hectares of land of the hacienda from agricultural to industrial use, pursuant to Sec. 65 of RA 6657. The DAR approved the application on August 14, 1996, subject to payment of three percent (3%) of the gross selling price to the FWBs and to HLI’s continued compliance with its undertakings under the SDP, among other conditions.

On December 13, 1996, HLI, in exchange for subscription of 12,000,000 shares of stocks of Centennary Holdings, Inc. (Centennary), ceded 300 hectares of the converted area to the latter. Subsequently, Centennary sold the entire 300 hectares for PhP750 million to Luisita Industrial Park Corporation (LIPCO), which used it in developing an industrial complex. From this area was carved out 2 parcels(180 has and 4 has), for which 2 separate titles were issued in the name of LIPCO. Later, LIPCO transferred these 2 parcels to the Rizal Commercial Banking Corporation (RCBC) in payment of LIPCO’s PhP431,695,732.10 loan obligations to RCBC(dacion en pago). LIPCO’s titles were cancelled and new ones were issued to RCBC.The other 200 has was transferred to Luisita Realty Corporation (LRC) in two separate transactions in 1997 and 1998, both uniformly involving 100 hectares for PhP 250 million each.Apart from the 500 hectares, another 80.51 hectares were later detached from Hacienda Luisita and acquired by the government as part of the Subic-Clark-Tarlac Expressway (SCTEX) complex. Thus, 4,335.75 hectares remained of the original 4,915 hectares Tadeco ceded to HLI.

Such, was the state of things when two separate petitions reached the DAR in the latter part of 2003. The first was filed by the Supervisory Group of HLI (Supervisory Group), praying for a renegotiation of the SDOA, or, in the alternative, its revocation. The second petition, praying for the revocation and nullification of the SDOA and the distribution of the lands in the hacienda, was filed by Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA). The DAR then constituted a Special Task Force (STF) to attend to issues relating to the SDP of HLI. After investigation and evaluation, the STF found that HLI has not complied with its obligations under RA 6657 despite the implementation of the SDP, AND RECOMMENDED. On December 22, 2005, the PARC issued the assailed Resolution No. 2005-32-01, recalling/revoking the SDO plan of Tadeco/HLI. It further resolved that the subject lands be forthwith placed under the compulsory coverage or mandated land acquisition scheme of the CARP.

From the foregoing resolution, HLI sought reconsideration. Its motion notwithstanding, HLI also filed a petition before the Supreme Court in light of what it considers as the DAR’s hasty placing of Hacienda Luisita under CARP even before PARC could rule or even read the motion for reconsideration. PARC would eventually deny HLI’s motion for reconsideration via Resolution No. 2006-34-01 dated May 3, 2006.

II. THE ISSUES(1) Does the PARC possess jurisdiction to recall or revoke HLI’s SDP?(2) [Issue raised by intervenor FARM (group of farmworkers)] Is Sec. 31 of RA 6657,

which allows stock transfer in lieu of outright land transfer, unconstitutional?

(3) Is the revocation of the HLI’s SDP valid? [Did PARC gravely abuse its discretion in revoking the subject SDP and placing the hacienda under CARP’s compulsory acquisition and distribution scheme?]

(4) Should those portions of the converted land within Hacienda Luisita that RCBC and LIPCO acquired by purchase be excluded from the coverage of the assailed PARC resolution? [Did the PARC gravely abuse its discretion when it included LIPCO’s and RCBC’s respective properties that once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of Coverage?]

III. THE RULING

HLI: PARC has no authority to revoke the SDP; it has the power to disapprove, but not to recall its previous approval of the SDP. It is the court which has jurisdiction and authority to order the revocation or rescission of the PARC-approved SDP (1) YES, the PARC has jurisdiction to revoke HLI’s SDP under the doctrine of necessary implication.

Under Sec. 31 of RA 6657, as implemented by DAO 10, the authority to approve the plan for stock distribution of the corporate landowner belongs to PARC. Contrary to petitioner HLI’s posture, PARC also has the power to revoke the SDP which it previously approved. It may be, as urged, that RA 6657 or other executive issuances on agrarian reform do not explicitly vest the PARC with the power to revoke/recall an approved SDP. Such power or authority, however, is deemed possessed by PARC under the principle of necessary implication, a basic postulate that what is implied in a statute is as much a part of it as that which is expressed.

Following the doctrine of necessary implication, it may be stated that the conferment of express power to approve a plan for stock distribution of the agricultural land of corporate owners necessarily includes the power to revoke or recall the approval of the plan. To deny PARC such revocatory power would reduce it into a toothless agency of CARP, because the very same agency tasked to ensure compliance by the corporate landowner with the approved SDP would be without authority to impose sanctions for non-compliance with it.

HLI: the parties to the SDOA should now look to the Corporation Code, instead of to RA 6657, in determining their rights, obligations and remedies. The Code should be the applicable law on the disposition of the agricultural land of HLI. SC: NO! the rights, obligations and remedies of the parties to the SDOA embodying the SDP are primarily governed by RA 6657. It should abundantly be made clear that HLI was precisely created in order to comply with RA 6657, which the OSG aptly described as the "mother law" of the SDOA and the SDP. It is, thus, paradoxical for HLI to shield itself from the coverage of CARP by invoking exclusive applicability of the Corporation Code under the guise of being a corporate entity.

(2) NO, Sec. 31 of RA 6657 is not unconstitutional. [The Court actually refused to pass upon the constitutional question because it was not raised at the earliest opportunity and because the resolution thereof is not the lis mota of the case. Moreover, the issue has been rendered moot and academic since SDO is no longer one of the modes of acquisition under RA 9700.]

While there is indeed an actual case or controversy, intervenor FARM, composed of a small minority of 27 farmers, has yet to explain its failure to challenge the constitutionality of Sec. 31 of RA 6657 as early as November 21, 1989 when PARC approved the SDP of Hacienda Luisita or at least within a reasonable time thereafter, and why its members received benefits from the SDP without so much of a protest. It was only on December 4, 2003 or 14 years after approval of the SDP that said plan and approving resolution were sought to be revoked, but not, to stress, by FARM or any of its members, but by petitioner AMBALA. Furthermore, the AMBALA petition did NOT question the constitutionality of Sec. 31 of RA 6657, but concentrated on the purported flaws and gaps in the subsequent implementation of the SDP. Even the public respondents, as represented by the Solicitor General, did not question the constitutionality of the provision. On the other hand, FARM, whose 27 members formerly belonged to AMBALA, raised the constitutionality of Sec. 31 only on May 3, 2007 when it filed its Supplemental Comment with the Court. Thus, it took FARM some eighteen (18) years from November 21, 1989 before it challenged the constitutionality of Sec. 31 of RA 6657 which is quite too late in the day. The FARM members slept on their rights and even accepted benefits from the SDP with nary a complaint on the alleged unconstitutionality of Sec. 31 upon which the benefits were derived. The Court cannot now be goaded into resolving a constitutional issue that FARM failed to assail after the lapse of a long period of time and the occurrence of numerous events and activities which resulted from the application of an alleged unconstitutional legal provision.

The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not likewise obtain. The lis mota aspect is not present, the constitutional issue tendered not being critical to the resolution of the case. If some other grounds exist by which judgment can be made without touching the constitutionality of a law, such recourse is favored.

The lis mota in this case, proceeding from the basic positions originally taken by AMBALA (to which the FARM members previously belonged) and the Supervisory Group, is the alleged non-compliance by HLI with the conditions of the SDP to support a plea for its revocation. And before the Court, the lis mota is whether or not PARC acted in grave abuse of discretion when it ordered the recall of the SDP for such non-compliance and the fact that the SDP, as couched and implemented, offends certain constitutional and statutory provisions. To be sure, any of these key issues may be resolved without plunging into the constitutionality of Sec. 31 of RA

6657. Moreover, looking deeply into the underlying petitions of AMBALA, et al., it is not the said section per se that is invalid, but rather it is the alleged application of the said provision in the SDP that is flawed.

It may be well to note at this juncture that Sec. 5 of RA 9700, amending Sec. 7 of RA 6657, has all but superseded Sec. 31 of RA 6657 vis-à-vis the stock distribution component of said Sec. 31. In its pertinent part, Sec. 5 of RA 9700 provides: “[T]hat after June 30, 2009, the modes of acquisition shall be limited to voluntary offer to sell and compulsory acquisition.” Thus, for all intents and purposes, the stock distribution scheme under Sec. 31 of RA 6657 is no longer an available option under existing law. The question of whether or not it is unconstitutional should be a moot issue.

(3) YES, the revocation of the HLI’s SDP valid. [NO, the PARC did NOT gravely abuse its discretion in revoking the subject SDP and placing the hacienda under CARP’s compulsory acquisition and distribution scheme.]

The revocation of the approval of the SDP is valid: (1) the mechanics and timelines of HLI’s stock distribution violate DAO 10 because the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of “man days” and the hiring of additional farmworkers; (2) the 30-year timeframe for HLI-to-FWBs stock transfer is contrary to what Sec. 11 of DAO 10 prescribes.

In our review and analysis of par. 3 of the SDOA on the mechanics and timelines of stock distribution, We find that it violates two (2) provisions of DAO 10. Par. 3 of the SDOA states:

3. At the end of each fiscal year, for a period of 30 years, the SECOND PARTY [HLI] shall arrange with the FIRST PARTY [TDC] the acquisition and distribution to the THIRD PARTY [FWBs] on the basis of number of days worked and at no cost to them of one-thirtieth (1/30) of 118,391,976.85 shares of the capital stock of the SECOND PARTY that are presently owned and held by the FIRST PARTY, until such time as the entire block of 118,391,976.85 shares shall have been completely acquired and distributed to the THIRD PARTY.

[I]t is clear as day that the original 6,296 FWBs, who were qualified beneficiaries at the time of the approval of the SDP, suffered from watering down of shares. As determined earlier, each original FWB is entitled to 18,804.32 HLI shares. The original FWBs got less than the guaranteed 18,804.32 HLI shares per beneficiary, because the acquisition and distribution of the HLI shares were based on “man days” or “number of days worked” by the FWB in a year’s time. As explained by HLI, a beneficiary needs to work for at least 37 days in a fiscal year before he or she becomes entitled to HLI shares. If it falls below 37 days, the FWB, unfortunately,

does not get any share at year end. The number of HLI shares distributed varies depending on the number of days the FWBs were allowed to work in one year. Worse, HLI hired farmworkers in addition to the original 6,296 FWBs, such that, as indicated in the Compliance dated August 2, 2010 submitted by HLI to the Court, the total number of farmworkers of HLI as of said date stood at 10,502. All these farmworkers, which include the original 6,296 FWBs, were given shares out of the 118,931,976.85 HLI shares representing the 33.296% of the total outstanding capital stock of HLI. Clearly, the minimum individual allocation of each original FWB of 18,804.32 shares was diluted as a result of the use of “man days” and the hiring of additional farmworkers.

Going into another but related matter, par. 3 of the SDOA expressly providing for a 30-year timeframe for HLI-to-FWBs stock transfer is an arrangement contrary to what Sec. 11 of DAO 10 prescribes. Said Sec. 11 provides for the implementation of the approved stock distribution plan within three (3) months from receipt by the corporate landowner of the approval of the plan by PARC. In fact, based on the said provision, the transfer of the shares of stock in the names of the qualified FWBs should be recorded in the stock and transfer books and must be submitted to the SEC within sixty (60) days from implementation.

To the Court, there is a purpose, which is at once discernible as it is practical, for the three-month threshold. Remove this timeline and the corporate landowner can veritably evade compliance with agrarian reform by simply deferring to absurd limits the implementation of the stock distribution scheme. the reason underpinning the 30-year accommodation does not apply to corporate landowners in distributing shares of stock to the qualified beneficiaries, as the shares may be issued in a much shorter period of time.

Taking into account the above discussion, the revocation of the SDP by PARC should be upheld [because of violations of] DAO 10. It bears stressing that under Sec. 49 of RA 6657, the PARC and the DAR have the power to issue rules and regulations, substantive or procedural. Being a product of such rule-making power, DAO 10 has the force and effect of law and must be duly complied with. The PARC is, therefore, correct in revoking the SDP. Consequently, the PARC Resolution No. 89-12-2 dated November 21, l989 approving the HLI’s SDP is nullified and voided.

(4) YES, those portions of the converted land within Hacienda Luisita that RCBC and LIPCO acquired by purchase should be excluded from the coverage of the assailed PARC resolution.

[T]here are two (2) requirements before one may be considered a purchaser in good faith, namely: (1) that the purchaser buys the property of another without notice that some other person has a right to or interest in such property; and (2)

that the purchaser pays a full and fair price for the property at the time of such purchase or before he or she has notice of the claim of another.

It can rightfully be said that both LIPCO and RCBC are purchasers in good faith for value entitled to the benefits arising from such status.First, at the time LIPCO purchased the entire three hundred (300) hectares of industrial land, there was no notice of any supposed defect in the title of its transferor, Centennary, or that any other person has a right to or interest in such property. In fact, at the time LIPCO acquired said parcels of land, only the following annotations appeared on the TCT in the name of Centennary: the Secretary’s Certificate in favor of Teresita Lopa, the Secretary’s Certificate in favor of Shintaro Murai, and the conversion of the property from agricultural to industrial and residential use.The same is true with respect to RCBC. At the time it acquired portions of Hacienda Luisita, only the following general annotations appeared on the TCTs of LIPCO: the Deed of Restrictions, limiting its use solely as an industrial estate; the Secretary’s Certificate in favor of Koji Komai and Kyosuke Hori; and the Real Estate Mortgage in favor of RCBC to guarantee the payment of PhP 300 million.

To be sure, intervenor RCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan, as the DAR conversion order was annotated at the back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots were validly converted to commercial or industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them. After all, Sec. 65 of RA 6657 explicitly allows conversion and disposition of agricultural lands previously covered by CARP land acquisition “after the lapse of five (5) years from its award when the land ceases to be economically feasible and sound for agricultural purposes or the locality has become urbanized and the land will have a greater economic value for residential, commercial or industrial purposes.” Moreover, DAR notified all the affected parties, more particularly the FWBs, and gave them the opportunity to comment or oppose the proposed conversion. DAR, after going through the necessary processes, granted the conversion of 500 hectares of Hacienda Luisita pursuant to its primary jurisdiction under Sec. 50 of RA 6657 to determine and adjudicate agrarian reform matters and its original exclusive jurisdiction over all matters involving the implementation of agrarian reform. The DAR conversion order became final and executory after none of the FWBs interposed an appeal to the CA. In this factual setting, RCBC and LIPCO purchased the lots in question on their honest and well-founded belief that the previous registered owners could legally sell and convey the lots though these were previously subject of CARP coverage. Ergo, RCBC and LIPCO acted in good faith in acquiring the subject lots.And second, both LIPCO and RCBC purchased portions of Hacienda Luisita for value. Undeniably, LIPCO acquired 300 hectares of land from Centennary for the amount

of PhP750 million pursuant to a Deed of Sale dated July 30, 1998. On the other hand, in a Deed of Absolute Assignment dated November 25, 2004, LIPCO conveyed portions of Hacienda Luisita in favor of RCBC by way of dacion en pago to pay for a loan of PhP431,695,732.10.In relying upon the above-mentioned approvals, proclamation and conversion order, both RCBC and LIPCO cannot be considered at fault for believing that certain portions of Hacienda Luisita are industrial/commercial lands and are, thus, outside the ambit of CARP. The PARC, and consequently DAR, gravely abused its discretion when it placed LIPCO’s and RCBC’s property which once formed part of Hacienda Luisita under the CARP compulsory acquisition scheme via the assailed Notice of Coverage.

[The Court went on to apply the operative fact doctrine to determine what should be done in the aftermath of its disposition of the above-enumerated issues:While We affirm the revocation of the SDP on Hacienda Luisita subject of PARC Resolution Nos. 2005-32-01 and 2006-34-01, the Court cannot close its eyes to certain “operative facts” that had occurred in the interim. Pertinently, the “operative fact” doctrine realizes that, in declaring a law or executive action null and void, or, by extension, no longer without force and effect, undue harshness and resulting unfairness must be avoided. This is as it should realistically be, since rights might have accrued in favor of natural or juridical persons and obligations justly incurred in the meantime. The actual existence of a statute or executive act is, prior to such a determination, an operative fact and may have consequences which cannot justly be ignored; the past cannot always be erased by a new judicial declaration. While the assailed PARC resolutions effectively nullifying the Hacienda Luisita SDP are upheld, the revocation must, by application of the operative fact principle, give way to the right of the original 6,296 qualified FWBs to choose whether they want to remain as HLI stockholders or not. The Court cannot turn a blind eye to the fact that in 1989, 93% of the FWBs agreed to the SDOA (or the MOA), which became the basis of the SDP approved by PARC per its Resolution No. 89-12-2 dated November 21, 1989. From 1989 to 2005, the FWBs were said to have received from HLI salaries and cash benefits, hospital and medical benefits, 240-square meter homelots, 3% of the gross produce from agricultural lands, and 3% of the proceeds of the sale of the 500-hectare converted land and the 80.51-hectare lot sold to SCTEX. HLI shares totaling 118,391,976.85 were distributed as of April 22, 2005. On August 6, 20l0, HLI and private respondents submitted a Compromise Agreement, in which HLI gave the FWBs the option of acquiring a piece of agricultural land or remain as HLI stockholders, and as a matter of fact, most FWBs indicated their choice of remaining as stockholders. These facts and circumstances tend to indicate that some, if not all, of the FWBs may actually desire to continue as HLI shareholders. A matter best left to their own discretion.]

The dissents in the July 5, 2011 decision

The dissents of the minority justices were on the other fine points of the decision.Chief Justice Corona dissented insofar as the majority refused to declare Sec. 31 of RA 6657 unconstitutional. The provision grants to corporate landowners the option to give qualified FWBs the right to own capital stock of the corporation in lieu of actual land distribution. The Chief Justice was of the view that by allowing the distribution of capital stock, and not land, as “compliance” with agrarian reform, Sec. 31 of RA 6657 contravenes Sec. 4, Article XIII of the Constitution, which, he argued, requires that the law implementing the agrarian reform program should employ [actual] land redistribution mechanism. Under Sec. 31 of RA 6657, he noted, the corporate landowner remains to be the owner of the agricultural land. Qualified beneficiaries are given ownership only of shares of stock, not [of] the lands they till. He concluded that since an unconstitutional provision cannot be the basis of a constitutional act, the SDP of petitioner HLI based on Section 31 of RA 6657 is also unconstitutional.Justice Mendoza fully concurred with Chief Justice Corona’s position that Sec. 31 of RA 6657 is unconstitutional. He however agreed with the majority that the FWBs be given the option to remain as shareholders of HLI. He also joined Justice Brion’s proposal that that the reckoning date for purposes of just compensation should be May 11, 1989, when the SDOA was executed by Tadeco, HLI and the FWBs. Finally, he averred that considering that more than 10 years have elapsed from May 11, 1989, the qualified FWBs, who can validly dispose of their due shares, may do so, in favor of LBP or other qualified beneficiaries. The 10-year period need not be counted from the issuance of the Emancipation Title (EP) or Certificate of Land Ownership Award CLOA) because, under the SDOA, shares, not land, were to be awarded and distributed.Justice Brion’s dissent centered on the consequences of the revocation of HLI’s SDP/SDOA. He argued that that the operative fact doctrine only applies in considering the effects of a declaration of unconstitutionality of a statute or a rule issued by the Executive Department that is accorded the status of a statute. The SDOA/SDP is neither a statute nor an executive issuance but a contract between the FWBs and the landowners; hence, the operative fact doctrine is not applicable. A contract stands on a different plane than a statute or an executive issuance. When a contract is contrary to law, it is deemed void ab initio. It produces no legal effects whatsoever. Thus, Justice Brion questioned the option given by the majority to the FWBs to remain as stockholders in an almost-bankrupt corporation like HLI. He argued that the nullity of HLI’s SDP/SDOA goes into its very existence, and the parties to it must generally revert to their respective situations prior to its execution. Restitution, he said, is therefore in order. With the SDP being void, the FWBs should return everything they are proven to have received pursuant to the terms of the SDOA/SDP. Justice Brion then proposed that all aspects of the implementation of the mandatory CARP coverage be determined by the DAR by starting with a clean slate from [May 11,] 1989, the point in time when the compulsory CARP coverage should start, and proceeding to adjust the relations of the parties with due regard to the events that intervened [thereafter]. He also held

that the time of the taking (when the computation of just compensation shall be reckoned) shall be May 11, 1989, when the SDOA was executed by Tadeco, HLI and the FWBs. Justice Sereno dissented with respect to how the majority modified the questioned PARC Resolutions (i.e., no immediate land distribution, give first the original qualified FWBs the option to either remain as stockholders of HLI or choose actual land distribution) and the applicability of the operative fact doctrine. She would instead order the DAR to forthwith determine the area of Hacienda Luisita that must be covered by the compulsory coverage and monitor the land distribution to the qualified FWBs.Erroneous interpretation of the Court’s decisionThe High Tribunal actually voted unanimously (11-0) to DISMISS/DENY the petition of HLI and to AFFIRM the PARC resolutions. This is contrary to media reports that the Court “voted 6-4” to dismiss the HLI petition. The five (not four) minority justices (Chief Justice Corona, and Justices Brion, Villarama, Mendoza, and Sereno) only partially dissented from the decision of the majority of six (Justice Velasco Jr., Leonardo-De Castro, Bersamin, Del Castillo, Abad, and Perez). Justice Antonio Carpio took no part in the deliberations and in the voting, while Justice Diosdado Peralta was on official leave. The 14th and 15th seats in the Court were earlier vacated by the retirements of Justices Eduardo Antonio Nachura (June 13, 2011) and Conchita Carpio-Morales (June 19, 2011).Another misinterpretation came from no less than the Supreme Court administrator and spokesperson, Atty. Midas Marquez. In a press conference called after the promulgation of the Court’s decision, Marquez initially used the term “referendum” in explaining the High Court’s ruling. This created confusion among the parties and the interested public since a “referendum” implies that the FWBs will have to vote on a common mode by which to pursue their claims over Hacienda Luisita. The decision was thus met with cries of condemnation by the misinformed farmers and the various people’s organizations and militant groups supportive of their cause.Marquez would later correct himself in a subsequent press briefing. But since by then the parties had already filed their respective motions for reconsideration, he called upon everyone to just “wait for the final resolution of the motion[s], which is forthcoming anyway.” The resolution of the consolidated motions for reconsideration came relatively early on November 22, 2011, or less than five months from the promulgation of the decision.

G.R. No. 171101 November 22, 2011

(1) Motion for Clarification and Partial Reconsideration dated July 21, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI);

- it is not proper to distribute the proceeds of the conversion sale to the FWBs the proceeds of the sale belong to the corporation for having sold its asset, and the distribution would be considered dissolution of HLI

- the actual taking is NOT November 21, 1989, but should be reckoned from finality of the Decision of this Court, or at the very least, the reckoning period may be tacked to January 2, 2006, the date when the Notice of Coverage was issued by the DAR

(2) Motion for Partial Reconsideration dated July 20, 2011 filed by PARC and DAR- Doctrine of Operative fact does not apply because no law was declared void.

(3) Motion for Reconsideration dated July 19, 2011 filed by AMBALA- RA 6657 is unconstitutional- "operative fact doctrine" does not apply. the option given to the farmers to

remain as stockholders of HLI is equivalent to an option for HLI to retain land in direct violation of the CARL, the SDP having been revoked. It should not apply if it would result to inequity

- CA erred in holding that improving the economic status of FWBs is not among the legal obligations of HLI under the SDP and an imperative imposition by RA 6657 and DAO 10

- CA erred in holding that LIPCO and RCBC were purchasers for value(4) Motion for Reconsideration dated July 21, 2011 filed by respondent-intervenor

Farmworkers Agrarian Reform Movement, Inc. (FARM);- same with AMBALA- issue of constitutionality is the lis mota of the case which must be decided

upon(5) Motion for Reconsideration dated July 21, 2011 filed by private respondents

Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. (Supervisory Group) and Windsor Andaya (collectively referred to as "Mallari, et al."); and

(6) Motion for Reconsideration dated July 22, 2011 filed by private respondents Rene Galang and

ISSUES:(1) applicability of the operative fact doctrine;(2) constitutionality of Sec. 31 of RA 6657 or the Comprehensive Agrarian Reform Law of 1988;(3) coverage of compulsory acquisition;(4) just compensation;(5) sale to third parties;(6) the violations of HLI; and(7) control over agricultural lands (revocation of SDP)

OPERATIVE FACT DOCTRINE (not much related)Bearing in mind that PARC Resolution No. 89-12-2 ––an executive act––was declared invalid in the instant case, the operative fact doctrine is clearly applicable.

it should be recognized that SC, in its July 5, 2011 Decision, affirmed the revocation of Resolution No. 89-12-2 and ruled for the compulsory coverage of the agricultural lands of Hacienda Luisita in view of HLI’s violation of the SDP and DAO 10. By applying the doctrine, this Court merely gave the qualified FWBs the option to remain as stockholders of HLI and ruled that they will retain the homelots and other benefits which they received from HLI by virtue of the SDP.

The application of the doctrine is favorable to the FWBs because not only were the FWBs allowed to retain the benefits and homelots they received under the stock distribution scheme, they were also given the option to choose for themselves whether they want to remain as stockholders of HLI or not.

CONSTITUTIONALITY(Upheld previous ruling)FARM is, therefore, remiss in belatedly questioning the constitutionality of Sec. 31 of RA 6657. The second requirement that the constitutional question should be raised at the earliest possible opportunity is clearly wanting.

The last but the most important requisite that the constitutional issue must be the very lis mota of the case does not likewise obtain. The lis mota aspect is not present, the constitutional issue tendered not being critical to the resolution of the case.

COVERAGE OF COMPULSORY ACQUISITIONFARM argues that this Court ignored certain material facts when it limited the maximum area to be covered to 4,915.75 hectares, whereas the area that should, at the least, be covered is 6,443 hectares, which is the agricultural land allegedly covered by RA 6657 and previously held by Tarlac Development Corporation (Tadeco). We cannot subscribe to this view. Since what is put in issue before the Court is the propriety of the revocation of the SDP, which only involves 4,915.75 has. of agricultural land and not 6,443 has., then We are constrained to rule only as regards the 4,915.75 has. of agricultural land.DAR, however, contends that the declaration of the area to be awarded to each FWB is too restrictive. It stresses that in agricultural landholdings like Hacienda Luisita, there are roads, irrigation canals, and other portions of the land that are considered commonly-owned by farmworkers, and this may necessarily result in the decrease of the area size that may be awarded per FWB. DAR also argues that

the July 5, 2011 Decision does not give it any leeway in adjusting the area that may be awarded per FWB in case the number of actual qualified FWBs decreases. The argument is meritorious. In order to ensure the proper distribution of the agricultural lands of Hacienda Luisita per qualified FWB, and considering that matters involving strictly the administrative implementation and enforcement of agrarian reform laws are within the jurisdiction of the DAR, it is the latter which shall determine the area with which each qualified FWB will be awarded.

500 HECTARESRCBC and LIPCO knew that the lots they bought were subjected to CARP coverage by means of a stock distribution plan, as the DAR conversion order was annotated at the back of the titles of the lots they acquired. However, they are of the honest belief that the subject lots were validly converted to commercial or industrial purposes and for which said lots were taken out of the CARP coverage subject of PARC Resolution No. 89-12-2 and, hence, can be legally and validly acquired by them.

PROCEEDS OF SALEConsidering that the 500-hectare converted land, as well as the 80.51-hectare SCTEX lot, should have been included in the compulsory coverage were it not for their conversion and valid transfers, then it is only but proper that the price received for the sale of these lots should be given to the qualified FWBs. In effect, the proceeds from the sale shall take the place of the lots.

JUST COMPENSATION - “TAKING”In Our July 5, 2011 Decision, We stated that "HLI shall be paid just compensation for the remaining agricultural land that will be transferred to DAR for land distribution to the FWBs." We also ruled that the date of the "taking" is November 21, 1989, when PARC approved HLI’s SDP per PARC Resolution No. 89-12-2.Mallari, et al. argued that the valuation of the land cannot be based on November 21, 1989. Instead, they aver that the date of "taking" for valuation purposes is a factual issue best left to the determination of the trial courts. AMBALA alleged that HLI should no longer be paid just compensation for the agricultural land that will be distributed to the FWBs, since the RTC already rendered a decision ordering "the Cojuangcos to transfer the control of Hacienda Luisita to the Ministry of Agrarian Reform, which will distribute the land to small farmers after compensating the landowners P3.988 million." In the event, however, that this Court will rule that HLI is indeed entitled to compensation, AMBALA contended that it should be pegged at forty thousand pesos (PhP 40,000) per hectare, since this was the same value that Tadeco declared in 1989 to make sure that the farmers will not own the majority of its stocks. SC: the date of "taking" is November 21, 1989, the date when PARC approved HLI’s SDP in view of the fact that this is the time that the FWBs were considered to own

and possess the agricultural lands in Hacienda Luisita. To be precise, these lands became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP, that is, November 21, 1989. Thus, such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition. Further, any doubt should be resolved in favor of the FWBs.

SALE TO THIRD PARTIESThere is a view that since the agricultural lands in Hacienda Luisita were placed under CARP coverage through the SDOA scheme on May 11, 1989, then the 10-year period prohibition on the transfer of awarded lands under RA 6657 lapsed on May 10, 1999, and, consequently, the qualified FWBs should already be allowed to sell these lands with respect to their land interests to third parties, including HLI, regardless of whether they have fully paid for the lands or not.

The proposition is erroneous. If the land has not yet been fully paid by the beneficiary, the right to the land may be transferred or conveyed, with prior approval of the DAR, to any heir of the beneficiary or to any other beneficiary who, as a condition for such transfer or conveyance, shall cultivate the land himself. Failing compliance herewith, the land shall be transferred to the LBP which shall give due notice of the availability of the land in the manner specified in the immediately preceding paragraph.In the event of such transfer to the LBP, the latter shall compensate the beneficiary in one lump sum for the amounts the latter has already paid, together with the value of improvements he has made on the land. Without a doubt, under RA 6657 and DAO 1, the awarded lands may only be transferred or conveyed after ten (10) years from the issuance and registration of the emancipation patent (EP) or certificate of land ownership award (CLOA). Considering that the EPs or CLOAs have not yet been issued to the qualified FWBs in the instant case, the 10-year prohibitive period has not even started. Significantly, the reckoning point is the issuance of the EP or CLOA, and not the placing of the agricultural lands under CARP coverage.if We maintain the position that the qualified FWBs should be immediately allowed the option to sell or convey the agricultural lands in Hacienda Luisita, then all efforts at agrarian reform would be rendered nugatory by this Court, since, at the end of the day, these lands will just be transferred to persons not entitled to land distribution under CARP.

CONTROL OVER AGRICULTURAL LANDSSC realized that the FWBs will never have control over these agricultural lands for as long as they remain as stockholders of HLI.bearing in mind that with the revocation of the approval of the SDP, HLI will no longer be operating under SDP and will only be treated as an ordinary private

corporation; the FWBs who remain as stockholders of HLI will be treated as ordinary stockholders and will no longer be under the protective mantle of RA 6657.

In addition to the foregoing, in view of the operative fact doctrine, all the benefits and homelots80 received by all the FWBs shall be respected with no obligation to refund or return them, since, as We have mentioned in our July 5, 2011 Decision, "the benefits x x x were received by the FWBs as farmhands in the agricultural enterprise of HLI and other fringe benefits were granted to them pursuant to the existing collective bargaining agreement with Tadeco."

One last point, the HLI land shall be distributed only to the 6,296 original FWBs. The remaining 4,206 FWBs are not entitled to any portion of the HLI land, because the rights to said land were vested only in the 6,296 original FWBs pursuant to Sec. 22 of RA 6657. With these, PARC/DAR’s, AMBALA’s, and FARM’s Motions – GRANTED.

The order giving option to the FWBs to choose whether or not to stay as shareholders was thereby recalled.

G.R. No. 171101 April 24, 2012Before the Court are the Motion to Clarify and Reconsider Resolution of November 22, 2011 dated December 16, 2011 filed by petitioner Hacienda Luisita, Inc. (HLI) and the Motion for Reconsideration/Clarification dated December 9, 2011 filed by private respondents Noel Mallari, Julio Suniga, Supervisory Group of Hacienda Luisita, Inc. and Windsor Andaya (collectively referred to as "Mallari, et al.").

Basically, the issues raised by HLI and Mallari, et al. boil down to the following: (1) determination of the date of "taking"; (2) propriety of the revocation of the option on the part of the original FWBs to remain as stockholders of HLI; (3) propriety of distributing to the qualified FWBs the proceeds from the sale of the converted land and of the 80.51-hectare Subic-Clark-Tarlac Expressway (SCTEX ) land; and (4) just compensation for the homelots given to the FWBs.

PAYMENT OF JUST COMPENSATIONHLI contends that since the SDP is a modality which the agrarian reform law gives the landowner as alternative to compulsory coverage, then the FWBs cannot be considered as owners and possessors of the agricultural lands of Hacienda Luisita at the time the SDP was approved by PARC. It further claims that the approval of the SDP is not akin to a Notice of Coverage in compulsory coverage situations because stock distribution option and compulsory acquisition are two (2) different

modalities with independent and separate rules and mechanisms. Concomitantly, HLI maintains that the Notice of Coverage issued on January 2, 2006 may, at the very least, be considered as the date of "taking" as this was the only time that the agricultural lands of Hacienda Luisita were placed under compulsory acquisition in view of its failure to perform certain obligations under the SDP.

UPHELD PREVIOUS DECISION: taking was effected on November 21, 1989

What is notable, however, is that the divestment by Tadeco of the agricultural lands of Hacienda Luisita and the giving of the shares of stock for free is nothing but an enticement or incentive for the FWBs to agree with the stock distribution option scheme and not further push for land distribution. And the stubborn fact is that the "man days" scheme of HLI impelled the FWBs to work in the hacienda in exchange for such shares of stock.When the agricultural lands of Hacienda Luisita were transferred by Tadeco to HLI in order to comply with CARP through the stock distribution option scheme, sealed with the imprimatur of PARC under PARC Resolution No. 89-12-2 dated November 21, 1989, Tadeco was consequently dispossessed of the afore-mentioned attributes of ownership. Notably, Tadeco and HLI are two different entities with separate and distinct legal personalities. Ownership by one cannot be considered as ownership by the other.Corollarily, it is the official act by the government, that is, the PARC’s approval of the SDP, which should be considered as the reckoning point for the "taking" of the agricultural lands of Hacienda Luisita. Although the transfer of ownership over the agricultural lands was made prior to the SDP’s approval, it is this Court’s consistent view that these lands officially became subject of the agrarian reform coverage through the stock distribution scheme only upon the approval of the SDP. And as We have mentioned in Our November 22, 2011 Resolution, such approval is akin to a notice of coverage ordinarily issued under compulsory acquisition.

FWBS ENTITLED TO PROCEEDS OF SALEHLI reiterates its claim over the proceeds of the sales of the 500 hectares and 80.51 hectares of the land as corporate owner and argues that the return of said proceeds to the FWBs is unfair and violative of the Corporation Code.This claim is bereft of merit.UPHELD PREVIOUS RULING - were it not for the approval of the SDP by PARC, these large parcels of land would have been distributed and ownership transferred to the FWBs, subject to payment of just compensation, given that, as of 1989, the subject 4,915 hectares of Hacienda Luisita were already covered by CARP.

HOMELOTSIn the present recourse, HLI also harps on the fact that since the homelots given to the FWBs do not form part of the 4,915.75 hectares covered by the SDP, then the

value of these homelots should, with the revocation of the SDP, be paid to Tadeco as the landowner. We disagree. As We have explained in Our July 5, 2011 Decision, the distribution of homelots is required under RA 6657 only for corporations or business associations owning or operating farms which opted for land distribution. This is provided under Sec. 30 of RA 6657.Since none of the provisions made reference to corporations which opted for stock distribution under Sec. 31 of RA 6657, then it is apparent that said corporations are not obliged to provide for homelots. Nonetheless, HLI undertook to "subdivide and allocate for free and without charge among the qualified family-beneficiaries x x x residential or homelots of not more than 240 sq. m. each, with each family beneficiary being assured of receiving and owning a homelot in the barrio or barangay where it actually resides." In fact, HLI was able to distribute homelots to some if not all of the FWBs.Thus, in our November 22, 2011 Resolution, We declared that the homelots already received by the FWBs shall be respected with no obligation to refund or to return them. However, since the SDP was already revoked with finality, the Court directs the government through the DAR to pay HLI the just compensation for said homelots in consonance with Sec. 4, Article XIII of the 1987 Constitution that the taking of land for use in the agrarian reform program is "subject to the payment of just compensation."

To recapitulate, the Court voted on the following issues in this manner:1) In determining the date of "taking," the Court voted 8-6 to maintain the ruling

fixing November 21, 1989 as the date of "taking," the value of the affected lands to be determined by the LBP and the DAR;

2) On the propriety of the revocation of the option of the FWBs to remain as HLI stockholders, the Court, by unanimous vote, agreed to reiterate its ruling in its November 22, 2011 Resolution that the option granted to the FWBs stays revoked;

3) On the propriety of returning to the FWBs the proceeds of the sale of the 500-hectare converted land and of the 80.51-hectare SCTEX land, the Court unanimously voted to maintain its ruling to order the payment of the proceeds of the sale of the said land to the FWBs less the 3% share, taxes and expenses specified in the fallo of the November 22, 2011 Resolution;

4) On the payment of just compensation for the homelots to HLI, the Court, by unanimous vote, resolved to amend its July 5, 2011 Decision and November 22, 2011 Resolution by ordering the government, through the DAR, to pay to HLI the just compensation for the homelots thus distributed to the FWBS.

the government, through DAR, is ordered to pay Hacienda Luisita, Inc. the just compensation for the 240-square meter homelots distributed to the FWBs.

ASSOCIATION OF SMALL LANDOWNERS V. SECRETARY OF DAR

CRUZ, J.:

FACTS:

These are consolidated cases involving common legal questions including serious

challenges to the constitutionality of R.A. No. 6657 also known as the

"Comprehensive Agrarian Reform Law of 1988"

In G.R. No. 79777, the petitioners are questioning the P.D No. 27 and E.O Nos. 228

and 229 on the grounds inter alia of separation of powers, due process, equal

protection and the constitutional limitation that no private property shall be taken

for public use without just compensation.

In G.R. No. 79310, the petitioners in this case claim that the power to provide for a

Comprehensive Agrarian Reform Program as decreed by the Constitution belongs to

the Congress and not to the President, the also allege that Proclamation No. 131

and E.O No. 229 should be annulled for violation of the constitutional provisions on

just compensation, due process and equal protection. They contended that the

taking must be simultaneous with payment of just compensation which such

payment is not contemplated in Section 5 of the E.O No. 229.

In G.R. No. 79744, the petitioner argues that E.O Nos. 228 and 229 were invalidly

issued by the President and that the said executive orders violate the constitutional

provision that no private property shall be taken without due process or just

compensation which was denied to the petitioners.

In G.R. No 78742 the petitioners claim that they cannot eject their tenants and so

are unable to enjoy their right of retention because the Department of Agrarian

Reform has so far not issued the implementing rules of the decree. They therefore

ask the Honorable Court for a writ of mandamus to compel the respondents to

issue the said rules.

ISSUE:

Whether or not the laws being challenged is a valid exercise of Police power or

Power of Eminent Domain.

RULING:

Police Power through the Power of Eminent Domain, though there

are traditional distinction between the police power and the power of eminent

domain, property condemned under police power is noxious or intended for

noxious purpose, the compensation for the taking of such property is not subject to

compensation, unlike the taking of the property in Eminent Domain or the power of

expropriation which requires the payment of just compensation to the owner of the

property expropriated.

DALMACIO URTULA, ET AL., plaintiffs-appellants, vs.REPUBLIC OF THE PHILIPPINES, (represented by the Land Tenure Administration), defendant-appellant.

Luciano M. Maggay for plaintiffs-appellants. Judicial Cases Division of Land Tenure Administration for defendant-appellant.

REYES, J.B.L., J.:

Direct appeals, by both the plaintiffs, Dalmacio Urtula, et al. and the defendant Republic of the Philippines, represented by the Land Tenure Administration, now Land Authority, from a judgment of the Court of First Instance of Camarines Sur, in its Civil Case No. 5306, ordering the defendant to pay interest upon a sum determined by final judgment as compensation for the property expropriated in a previous case of eminent domain between the same parties, Civil Case No. 3837 of the same court.

The facts, as stipulated by the parties, and as found by the court a quo are as follows:

The Court of First Instance had rendered judgment on 16 November 1957 in its Civil Case No. 3837, for the expropriation of the Hacienda Quitang, owned by Dalmacio Urtula by the Republic of the Philippines, for the sum of P213,094.00, "and upon making the payment the plaintiff shall take full possession of the land." The Republic appealed the decision to the Court of Appeals, raising the sole issue of whether the amount fixed by the trial court was a just compensation for the property. While the appeal was pending before the Court of Appeals, the Republic of the Philippines deposited on 29 July 1958, with the Philippine National Bank the sum of P117,690.00 as provisional value of the land, in accordance with an order of the trial court dated 3 January 1958, and this deposit was withdrawn by Dalmacio Urtula in August of 1958.

Thereafter, on 10 September 1958, the Court of Appeals granted the Republic's petition to be placed in possession of the property; and under a writ of possession issued by the provincial sheriff of the province, the Land Tenure Administration took actual physical possession of the land on 11 October 1958.

Subsequently, the Court of Appeals found that the issue between the parties was purely one of law and thereby elevated the appeal to the Supreme Court. This Court rendered judgment thereon on 29 November 1960 in case No. L-16028, affirming the appealed judgment of the Court of First Instance, without modification.

The Supreme Court had affirmed, as aforesaid, the decision of the trial court fixing the amount of just compensation for P213,094.00; thus, at the time the decision became final, the balance still due was P95,404.00. Of this balance, the Republic paid Dalmacio Urtula the sum of P5,404.00 on 17 April 1961; but on the same day, Urtula deposited same amount with the Land Tenure Administration in payment of taxes and penalties for prior years up to 1958 on the expropriated land and for the surveyor's fee for segregating one hectare donated by condemnee Urtula for a school site. On liquidation at a later date, an excess in the amount of P423.38 was found, and the Republic refunded this excess to Urtula on 25 September 1961. On 3 May 1961, the Republic paid the remaining balance of P90,000.00.

The taxes due and unpaid, including penalties, on the land for the years 1959, 1960 and 70% of 1961 were computed at a total of P3,534.23 as of 28 February 1962. The interest of 6% on P95,404.00 from 11 October 1958, the date when the condemnor Republic took possession of the land to May 1961, when the final balance was paid to Urtula was also computed at a total of P14,633.52.

On 26 January 1961, the plaintiff demanded payment of said interest (P14,633.52) but the defendant Republic refused, on the ground that no payment of interest had been ordered in the decision in Civil Case No. 3837, the expropriation proceedings, or in the affirmatory decision of the Supreme Court in G.R. No. L-16028.

The parties further stipulated as a fact that the plaintiff had agreed to pay his counsel 10% of the amount recoverable from the defendant, as attorney's fees.

Upon the foregoing stipulated facts, the trial court rendered judgment for plaintiff Urtula and ordered the defendant Republic to pay P14,633.52 as interest on the balance of P95,404.00 from 11 October 1958 to 3 May 1961 and to pay the costs, but denied the plaintiff's claim on the land taxes 1 and attorney's fees.

Both parties were not satisfied with the decision; hence, both appealed to this Court.1äwphï1.ñët

Against the defendant Republic's defense that the final judgment in the expropriation case, which did not provide for interest, operates to bar the present case, by res judicata, the theory of plaintiff Urtula is that there is no identity of causes of action in the said cases.

Thus, Urtula relates his predicaments as follows: that while the expropriation case was pending before the trial court, he could not claim interest because the Republic had not as yet taken possession of the land and the rule is that interest accrues from the time of such taking; but when the Republic took possession, the case was already on appeal and he could not ask relief because he was not an appellant nor could he raise the issue of interest for the first time on appeal, aside from his being impeded by the rule that proof with respect to the taking of possession had to be adduced before the trial court, not the appellate court.

Urtula's dilemma lies in his mistaken concept of the nature of the interest that he failed to claim in the expropriation case and which he now claims in this separate case. Said interest is not contractual, nor based on delict or quasi-delict, but one that —

runs as a matter of law and follows as a matter of course from the right of the landowner to be placed in as good a position as money can accomplish, as of the date of the taking (30 C.J.S. 230).

Understood as such, Urtula, as defendant in the expropriation case, could have raised the matter of interest before the trial court even if there had been no actual taking yet by the Republic and the said court could have included the payment of interest in its judgment but conditioned upon the actual taking, because the rate of

interest upon the amount of just compensation (6%) is a known factor, and it can reasonably be expected that at some future time, the expropriator would take possession of the property, though the date be not fixed. In this way, multiple suits would be avoided. Moreover, nothing prevented appellee from calling the attention of the appellate courts (even by motion to reconsider before judgment became final) to the subsequent taking of possession by the condemnor, and asking for allowance of interest on the indemnity, since that followed the taking as a matter of course, and raised no issue requiring remand of the records to the Court of origin.

As the issue of interest could have been raised in the former case but was not raised, res judicata blocks the recovery of interest in the present case. (Tejedor vs. Palet, 61 Phil. 494; Phil. Engineering Corp., et al. vs. Ceniza, etc., et al., L-17834, 29 Sept. 1962). It is settled that a former judgment constitutes a bar, as between the parties, not only as to matters expressly adjudged, but all matters that could have been adjudged at the time (Rule 39, sec. 49; Corda vs. Maglinti, L-17476, Nov. 30, 1961; Rodriguez vs. Tan, 48 Off. Gaz. 3330). It follows that interest upon the unrecoverable interest, which plaintiff also seeks, cannot, likewise, be granted.

It is not amiss to note that Section 3 of Rule 67 of the Revised Rules of Court (Sec. 4, Rule 69 of the old Rules), in fact, directs the defendant in an expropriation case to "present in a single motion to dismiss or for other appropriate relief, all of his objections and defenses . . ." and if not so presented "are waived." (Emphasis Supplied.) 2 As it is, the judgment allowing the collection of interest, now under appeal in effect amends the final judgment in the expropriation case, a procedure abhorrent to orderly judicial proceedings.

The Republic took possession on 11 October 1958. From this date, therefore, the owner, while retaining the naked title, was deprived of the benefits from the land and it is just and fair that realty taxes for the years 1959 and onward should be borne by the entity exercising the right of eminent domain. (City of Manila vs. Roxas, 60 Phil. 215).

Costs in cases of eminent domain, except those of rival claimants litigating their claims, are charged against the plaintiff. (Sec. 12, Rule 67, Rules of Court; Sec. 13, Rule 67 of the old Rules.) But the present case is not one of eminent domain but an ordinary civil action where the Republic of the Philippines is a party. Section 1 of Rule 142 provides that no costs shall be allowed against it, unless otherwise provided by law. No provision of law providing the contrary has been cited; hence, costs should be charged against Urtula.

FOR THE FOREGOING REASONS, the appealed judgment is reversed and the case dismissed, with costs against the plaintiffs Dalmacio Urtula, et al.

KNECHT VS. COURT OF APPEALS [290 SCRA 223; G.R. NO. 108015, 20 MAY 1998]Saturday, January 31, 2009 Posted by Coffeeholic Writes Labels: Case Digests, Political Law

Facts: The instant case is an unending sequel to several suits commenced almost

twenty years ago involving a parcel of land located at the corner of the south end of

EDSA and F.B. Harrison in Pasay City. The land was owned by petitioners Cristina de

Knecht and her son, Rene Knecht. On the land, the Knechts constructed eight

houses, leased out the seven and occupied one of them as their residence. In 1979,

the government filed for the expropriation of Knechts’ property. The government

wanted to use the land for the completion of the Manila Flood Control and

Drainage Project and the extension of the EDSA towards Roxas Boulevard. In 1982,

the City Treasurer of Pasay discovered that the Knechts failed to pay real estate

taxes on the property from 1980 to 1982. As a consequence of this deficiency, the

City Treasurer sold the property at public auction for the same amount of their

deficiency taxes. The highest bidders were respondent Spouses Anastacio and Felisa

Babiera (the Babieras) and respondent Spouses Alejandro and Flor Sangalang (the

Sangalangs). Subsequently, Sangalang and Babiera sold the land to respondent

Salem Investment Corporation. On February 17, 1983, the Batasang Pambansa

passed B.P. Blg. 340 authorizing the national government to expropriate certain

properties in Pasay City for the EDSA Extension. The property of the Knechts was

part of those expropriated under B.P. Blg. 340. The government gave out just

compensation for the lands expropriated under B.P. Blg. 340. Salem was included

and received partial payment. Seven of the eight houses of the Knechts were

demolished and the government took possession of the portion of land on which

the houses stood. Since the Knechts refused to vacate their one remaining house,

Salem filed a case against them for unlawful detainer. As defense, the Knechts

claimed ownership of the land and building. The Municipal Trial Court however

ordered the Knechts' ejectment thus their residence was demolished.

The Knechts continuously claimed ownership of the property and allege that they

must be given just compensation.

Issue: Whether or not Knechts are the lawful owners of the land at subject.

Held: The Supreme Court held that the Knechts were not the owners anymore of

the said land. The Knechts' right to the land had been foreclosed after they failed to

redeem it one year after the sale at public auction. Since the petitions questioning

the order of dismissal were likewise dismissed by the Court of Appeals and this

Court, the order of dismissal became final and res judicata on the issue of

ownership of the land. Petitioners contended that they did not receive notice of

their tax delinquency. Neither did they receive notice of the auction sale. However,

this question has been previously raised in the cases which have been already set

aside. The court is not a trier of facts. Res judicata has already set it. The Knechts

therefore are not the lawful owners of the land and are not any longer accountable

for just compensation given by the government.

Note: Res judicata is a ground for dismissal of an action. It is a rule that precludes

parties from relitigating Issue actually litigated and determined by a prior and final

judgment. It pervades every well-regulated system of jurisprudence, and is based

upon two grounds embodied in various maxims of the common law — one, public

policy and necessity, that there should be a limit to litigation; and another, the

individual should not be vexed twice for the same cause. When a right of fact has

been judicially tried and determined by a court of competent jurisdiction, or an

opportunity for such trial has been given, the judgment of the court, so long as it

remains unreversed, should be conclusive upon the parties and those in privity with

them in law or estate. To follow a contrary doctrine would subject the public peace

and quiet to the will and neglect of individuals and prefer the gratification of the

litigious disposition of the parties to the preservation of the public tranquility.

Res judicata applies when: (1) the former judgment or order is final; (2) the

judgment or order is one on the merits; (3) it was rendered by a court having

jurisdiction over the subject matter and the parties; (4) there is between the first

and second actions, identity of parties, of subject matter and of cause of action.